Colombia Borrows Like In The Pandemic, But This Time At A Much Higher Cost

Key Points

• Colombia raised $4.95 billion abroad to plug its 2026 budget gap, proving it still has market access.
• The price was steep: near 6% in dollars, with repayment pressure clustering in 2029–2033.
• More dollar debt can flatter the peso short-term, but it raises the bill if the currency weakens later.

Colombia is borrowing at pandemic-scale levels again, but this time to cover a fiscal hole, not an emergency.

The government sold $4.95 billion in new U.S.-dollar bonds in one of the largest external offerings in the country’s history, aiming to secure financing for the 2026 national budget while pushing a heavy share of the repayment burden into the next administration.

The deal was split into three maturities: $2.0 billion due 2029 at a 5.375% coupon, $1.475 billion due 2031 at 6.125%, and $1.475 billion due 2033 at 6.50%.

Officials highlighted peak demand around $23.2 billion, with buying interest led largely by U.S. and U.K. investors. Access, in other words, remains open. The catch is the price: the weighted average coupon was about 5.93%.

That cost fuels a debate the government has tried to frame as progress. President Gustavo Petro has argued that Colombia’s dollar borrowing rate has fallen.

Critics counter that this comparison often mixes apples and oranges, contrasting peso borrowing levels with dollar yields, and that the true test is the premium Colombia pays over U.S. Treasuries, widely estimated around 250–300 basis points.

Another gauge, sovereign credit-default swaps, has also been watched closely as a shorthand for perceived risk. The backdrop is uncomfortable.

Colombia’s external debt has climbed, with central bank-linked figures placing total external debt around $211.6 billion by September 2025, roughly 48.6% of GDP, and public-sector external debt around $118.1 billion, about 27.9% of GDP.

Separate fiscal discussions have also pointed to the need for additional measures, including possible tax changes, to make 2026 financing add up.

Dollar borrowing carries a second, quieter risk. Fresh inflows can support the peso for a time, but if the currency weakens later, interest and principal become more expensive in local terms. Colombia bought time. It also bought sensitivity.

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